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A group of ladies have met to paint for many years with a teacher who had an incorporated business as an art studio. The teacher just died and the ladies just want to continue meeting to paint together without a teacher. They just want to pay rent and utilities and meet each week. Do they have to have any tax free status? They pay cash to pay bills that they all contribute to. No profit is made.

The incorporated business would have been the lady's. And so would any leases and property, etc. Are you saying the group still wants to meet and rent a space? They can do that as hobbyists, it's just means they can't deduct anything they pay as an expense on their taxes. But you need to find space, or find out who you would pay for the space if you want to use the same space as before. The business space must either have been rented - meaning a lease in the deceased's name which will need to be renegioted - or owned by her, and now owned by either her heirs or someone else. You'd need to find out.

The space was rented on a monthly basis by the teacher. The family will dissolve the incorporation and want the ladies to continue painting as a group. The teacher left the easels, brushes, books, and tables to the students informally and with agreement by the family. The group now just wants to continue meeting there and pick up the rent and utilities. The rent and utilities was paid up until the end of the month. (the teacher passed a couple of weeks ago)
The ladies hope the landlady will just accept the rent and let them continue. Nobody wants to put their name on the bottom line. They are all older and mostly retired and many on fixed incomes. If the landlady won't deal they will look for another place and move but the same question remains.

Why not form a club? That way the group can elect a chair, treasurer and secretary all who could sign on behalf of the club with no tax liability. The club can also arrange public liability insurance for the premises too, which is neccesary in case of accident.

A club is a good idea. I think at the end of the day the landlady is going to want a name unfortunately. Otherwise if there is no valid lease squatters rights could come into play. Also, there could be insurance issues. It's likely the teacher had liability insurance to protect group gatherings on the premises. Like Greg says, having a club does give a way to address both those problems.

If staying in the same place isn't possible, perhaps the group could look around for more community-oriented spaces that would let them meet (possibly rent, though possibly free) like community centres, libraries?

So sorry for their loss and I hope they can find a good solution. Perhaps they should start with talking to the landlady? She might have an easy solution and be happy to work something out.